What's the difference between a tax rate and a tax bracket?

Tax brackets refer to the table created when matching filing statuses with their corresponding tax rates. There are three components of a tax bracket: filing status, tax rate, and income range. Tax rates are shown on the Y-axis and filing statuses are shown on the X-axis. The amount of income taxed at a specific rate for a specific income amount is found in the body of the tax bracket. Each of the seven tax rates apply to a specific level of income rather than applying to all of a taxpayer’s taxable income. Taxpayers use a tax bracket to determine what their tax rates are.

The Internal Revenue Service (IRS) uses a progressive tax system, meaning that the more a taxpayer earns the more tax will be owed. Taxpayers pick which filing status is most appropriate to their situation, and calculate how much income is taxable after accounting for deductions and exemptions. There are five filing statuses: single, married filing separately, married filing jointly, head of household, and qualifying widow/widower with dependent child. There are also six marginal income tax brackets, each assigned a different tax rate.

2014 Tax Brackets

Tax rate

Single filers

Married filing jointly or qualifying widow/widower

Married filing separately

Head of household

10%

Up to $9,075

Up to $18,150

Up to $9,075

Up to $12,950

15%

$9,076 to $36,900

$18,151 to $73,800

$9,076 to $36,900

$12,951 to $49,400

25%

$36,901 to $89,350

$73,801 to $148,850

$36,901 to $74,425

$49,401 to $127,550

28%

$89,351 to $186,350

$148,851 to $226,850

$74,426 to $113,425

$127,551 to $206,600

33%

$186,351 to $405,100

$226,851 to $405,100

$113,426 to $202,550

$206,601 to $405,100

35%

$405,101 to $406,750

$405,101 to $457,600

$202,551 to $228,800

$405,101 to $432,200

39.6%

$406,751 or more

$457,601 or more

$228,801 or more

$432,201 or more

For example, a taxpayer who earns $50,000 and files as single does not pay a tax rate of 25% on all taxable income, but only income between $36,901 and $50,000. He or she will pay a tax rate of 10% on the first $9,076 of income, and 15% on income between $9,076 and $36,901.